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  • This page is from the Tracker Service September 2014 launch, and is only updated for Tracker subscribers

    The Tracker will be surveying investors’ views on regulated AIFs every quarter – and, in
    particular, will be examining their popularity in relation to the other available options open to them, such as: professional investor funds, alternative UCITS and traditional offshore funds.

    In preparation for the launch of The Tracker IFI Global’s research department asked alternative managers what their investors think of the Directive. IFI Global interviewed 72 organisations with dedicated alternative assets of $197 billion, and an overall AUM of approximately $2.5 trillion. The majority of managers surveyed said that there is very little investor demand for regulated AIFs, to date. However others say the disclosure provisions in AIFMD are welcomed, particularly by northern European institutions.

    A variable level of understanding on AIFMD was reported by managers of their investors. Approximately 30% said that the Directive has broadly been welcomed by investors. Those that are in this category suggested that institutional investors will increasingly require funds to be compliant with the Directive before considering making allocation. Other institutions have said that they intend to continue to go down the traditional offshore fund route.

    But the majority of survey interviewees reported that investors that they have spoken to about AIFMD have yet to form an opinion on this topic. Interviewees were split on whether the increased regulatory costs will be passed on to investors. Approximately 35% of managers surveyed believe that investors will not allocate to those that attempt to pass on increases in their regulatory costs.

    There was a widespread concern, expressed by many boutique managers, that investors will perceive regulated AIFs as being safer than offshore funds and will not do the requisite level of due diligence as a result. For example through its extensive reporting requirements AIFMD allows risk management respectability to be bestowed on a number of manager organisations that does not appear to be justified. Many investors may not understand this, it was suggested.

    Selected comments from survey respondents:
    • “AIFMD has raised the administration costs in our funds by approximately 50%, but I do not expect any investor will ever be able to identify a single benefit they have derived from the expenditure they have been forced to undertake” – $800 million long-short equity manager.
    • “The number one priority for investors is return. By adding to costs the increase in regulation takes away from returns. This will deter investors; it will not encourage them” – Quant macro manager.
    • “We have experienced the full spectrum of interest from ‘not at all interested’ to ‘if you are not AIFMD compliant we won’t invest’” – large PE manager.